Florida Construction Licensing – Qualifying an Additional Business
In Florida, a construction license is given to an individual and not a business organization. If a business organization is not qualified and enters into contracts for the improvement of real property, it may be engaged in unlicensed activity. To avoid this, construction licensees should understand the means and methods to have their business organization qualified in Florida. Section 489.119, Florida Statutes, sets forth the requirements of the construction license holder to qualify a business organization.
Often times, the contractor may actually be seeking to qualify an additional or second business or to add a second license scope to the existing business. For example, a pool contractor may want to qualify two separate pool companies under a franchise arrangement. The construction license holder must seek to have his/her license placed with the business as the qualifying agent. As it relates to the new business to be qualified, the CILB has promulgated rules governing the qualification of additional business entities, specifically, 61G4-15.0024 which states:
Documentation of one or more of the following factors in an application to qualify a business entity will demonstrate to the Board, absent evidence to the contrary, that an applicant possesses the ability to properly supervise the proposed additional business entity for purposes of the application:
(1) The applicant to qualify an additional business owns 20% or more of the business to be qualified;
(2) The applicant to qualify an additional business is a W2 employee of the business to be qualified; or
(3) Other evidence of the means and methods utilized by the applicant to ensure control over the construction work of the proposed additional entity.
For a contractor to qualify an additional business entity, they must present evidence to the CILB of their ability to supervise each business. This means that the license holder will be responsible for all construction operations and have final say on all business matters of both businesses. If the contractor owns less than 50% of each business, they will be required to appear at one of the board’s monthly meetings to explain how they intend on supervising the businesses.
Such appearance at the CILB is the opportunity for the applicant or his/her lawyer to present evidence as to the manner of how the additional business entity will be supervised. While 20% ownership is the CILB rule requirement, generally the CILB wants to see that the applicate has control over the business or at least the supervision. Factors that weigh into this consideration are whether the applicant can sign contracts, bids, change orders, checks or whether the applicant has the ability to hire and fire employees.
In addition, the geographical location of the companies will impact the analysis on direct supervision. Supervision takes on a number of forms and can be handled personally or through employees supervised by the license-holder. An explanation of this supervisory structure at any CILB hearing will go a long way into the approval of the additional business qualification.
Less than 50% ownership is not a bar to approval of the application, but it is a factor that is considered in whether the applicate has the ability to supervise. At a minimum, the construction license holder needs to be a W-2 employee of the company with the responsibility of supervising all construction operations. If the applicant is receiving payment under a 1099 or as an independent contractor, that is called “renting the license” and it is illegal and the application to qualify the additional business will be denied. There are some additional application requirements:
- Financial/Credit: Applicants will need to provide proof of financial stability and responsibility by submitting credit reports for themselves and the business entities they wish to qualify. Credit reports must include a FICO derived credit score and indicate that local, state and federal records have been searched. If the applicant has open liens and judgments, the CILB will require satisfaction or written proof of a payment plan to satisfy the lien or judgment.
- Fingerprints: An applicant must have a background check as part of the licensing process. Applicants with poor moral character will be denied.
- Insurance: Applicants are required to attest that they have obtained public liability and property damage insurance in the amounts determined by CILB rule. Applicants are also required to obtain workers compensation insurance or obtain an exemption from workers compensation insurance within 30 days of issuance of their license.
- Local License: In lieu of a state certification examination, applicants for registration must show evidence of possessing a certificate of competency from a local licensing office (“local comp card”), as provided for in the application.
- Fee: The applicant must pay the required fee as provided in the application.
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